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June 14, 2018

Supreme Court Decides Animal Science Products v. Hebei Welcome Pharmaceuticals

On June 14, 2018, the Supreme Court of the United States decided Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd., No. 16-1220, holding that a federal court determining foreign law under Fed. R. Civ. P. 44.1 is not bound by a foreign government’s statements about the meaning of its law, but must accord those statements respectful consideration.

The plaintiffs filed a class-action suit against four Chinese corporations that manufacture and export vitamin C, alleging that the Chinese sellers had agreed to fix the price and quantity of vitamin C exported to the U.S. in violation of the Sherman Act. The sellers moved for summary judgment on the ground that Chinese law required them to fix the price and quantity of vitamin C exports, and that they are therefore shielded from U.S. antitrust liability under various doctrines. The Ministry of Commerce of the People’s Republic of China filed a brief as amicus curiae in support of the sellers’ motion, stating the alleged conspiracy was “a regulatory pricing regime mandated by the government of China.” The plaintiffs disputed that Chinese law required the sellers to engage in price fixing, citing statements by China to the World Trade Organization that it had given up export administration of vitamin C in 2002.

The district court denied the defendants’ motion for summary judgment. While acknowledging that the Ministry’s statement of Chinese law was “entitled to substantial deference,” the court did not regard the statement as conclusive, and concluded that Chinese law did not require the sellers to fix the price or quantity of vitamin C exports. At trial, a jury ruled in favor of the plaintiffs, finding that the sellers were not “actually compelled” by China to engage in price fixing. On appeal, the Second Circuit reversed, holding that the district court should have granted the defendants’ motion for summary judgment because when a foreign government makes a statement in U.S. court proceedings about the construction and effect of its laws and regulations that is reasonable under the circumstances, the U.S. court is bound to defer to that statement. Because the Ministry’s statement regarding Chinese law was reasonable, the Second Circuit held that the district court should have disregarded the plaintiffs’ contrary arguments about the meaning of Chinese law, and deferred to the Ministry’s statement.

The Supreme Court reversed, holding that a federal court is not bound by a foreign government’s statements about the meaning of its law, but must accord those statements respectful consideration. The Court began by noting that under Rule 44.1 of the Federal Rules of Civil Procedure, determination of foreign law is a question of law, not fact, and that the court may consider any relevant material or source in making its determination. But Rule 44.1 does not address the weight that a court should give to the views of the relevant foreign government. The Court stated that “[i]n the spirit of ‘international comity,’” a federal court should “carefully consider a foreign state’s views about the meaning of its own laws,” but “the appropriate weight in each case will depend upon the circumstances.” For example, when the foreign government makes conflicting statements about the meaning of its laws, that may lead to caution in evaluating the government’s position in the U.S. litigation. The Court concluded that federal courts are not bound to adopt a foreign government’s characterization of its own laws, or required to ignore other relevant materials that shed light on the meaning of the foreign law, but they must always give “respectful consideration” to the foreign government’s view of its own laws. The Court noted that its conclusion was consistent with two international treaties that establish a mechanism for one government to obtain an official statement of another government’s interpretation of its laws. Those treaties specify that the information given in reply is not binding on the requesting country. The Court remanded the case for further consideration under the standard that the Court set.

Justice Ginsburg delivered the opinion for a unanimous Court.

Download Opinion of the Court.

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